Finance ministry monitoring impact of Fed rate hike, N. Korea's provocations

All News 10:00 November 03, 2022

By Kang Yoon-seung

SEOUL, Nov. 3 (Yonhap) -- South Korea's finance ministry said Thursday it is closely monitoring the potential impact of the U.S. Federal Reserve's overnight rate hike and North Korean provocations on the country's economy.

"Following the Fed's rate hike, uncertainties for the South Korean and global financial markets have grown. We plan to respond by staying more vigilant than any other time," the Ministry of Economy and Finance said in a press release.

Earlier in the day, Finance Minister Choo Kyung-ho and other officials, including Bank of Korea Gov. Rhee Chang-yong, held a closed-door emergency meeting on macroeconomic situations.

The meeting came hours after the Fed raised its benchmark rate by another 75 basis points on Wednesday (local time) to a target range of 3.75 to 4 percent.

The move is expected to pressure South Korea to continue its monetary tightening further.

Last month, the Bank of Korea raised its key policy rate by 0.5 percentage point to 3 percent to tackle inflation. It marked the second-ever big-step increase and the eighth rise in borrowing costs since August last year amid the inflation pressure.

"In terms of North Korean provocations, we believe there will be no notable impact on the local financial market, considering the response from the global market until the early morning," the ministry added. "We also plan to closely watch related market situations."

On Thursday, North Korea fired three missiles toward the East Sea, a day after launching a barrage of missiles, including one that flew across its de facto maritime border with South Korea for the first time since the end of the 1950-53 Korean War.

Seoul stocks opened sharply lower Thursday. The benchmark Korea Composite Stock Price Index (KOSPI) dipped 39.87 points, or 1.71 percent, to 2,297 in the first 15 minutes of trading.

The local currency was trading hands at 1,426.9 won against the greenback, down 9.5 won from Wednesday's close, as of 9:15 a.m.